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Conning forecasts gains for U.S. insurers in 2014

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Expect financial results ranging from “stable” to “gradual improvement” for the U.S. insurance industry in 2014.

So forecasts industry research firm Conning in a new report, “U.S. and Global Insurance Industry Outlook: Improving Performance Amid Economic and Regulatory Challenges.” The report explores influences on insurers — including U.S. property & casualty insurers, U.S. life insurance and annuity providers, U.S. health insurance providers, plus insurers operating globally — and identifies internal changes and demands to expect in the year ahead.

Underpinning the forecast for U.S. insurers are “mostly favorable” economic drivers.

“[M]any companies are beginning to reap the rewards of investments in technology and an increasingly analytical approach to the business,” the report states. “However this view is accompanied by increasing uncertainty; improvements may be interrupted or reversed through economic, political, or regulatory developments unfolding in 2014.”

Turning to the global industry outlook, which focuses chiefly on industry prospects in Europe (including the U.K.) and Asia, the reports highlights the dominant influence of regulatory and economic factors affecting companies in these regions.

“Growing regulatory convergence and complexity are commanding insurer attention and resources,” the report observes. “Fragmented economic growth is creating new pockets of growth, while challenging established markets.”

Among developments expected in the U.S. life insurance market, the report forecasts the following:

Premium growth will improve modestly above that of the “tepid growth” observed between 2009 and 2013. Contributing to the expected improvement will be economic gains and investments in products and technology.

Annuity premium growth will remain flat, due in part to “intense completion among insurers and volatility in product preferences” among consumers and distributors.

Whole life and term life sales will continue to show gains, in contrast to “weak” sales for universal life products.

Historically low interest rates will continue to buffet net flows and credit rates as “General Account book yields fall further with reinvestment of maturing bonds.”

Insurer’s growing capital levels will “drive companies to look for new growth opportunities.”


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